The court affirms NSEI's status, emphasizing deep governmental control and its role in public functions.
In a landmark decision, the Delhi High Court has upheld the classification of the National Stock Exchange of India (NSEI) as a "public authority" under the Right to Information (RTI) Act, 2005. This judgment affirms the earlier decision by a single judge and dismisses the appeal by the NSEI, marking a significant step towards ensuring transparency and accountability in financial markets.
The division bench, comprising Justices C. Hari Shankar and Om Prakash Shukla, delivered the verdict on July 1, 2026. They examined whether the NSEI falls within the ambit of Section 2(h) of the RTI Act, which defines a "public authority." The court concluded that the NSEI qualifies under both the first and second parts of Section 2(h) due to its establishment and deep control by the government.
The NSEI, incorporated on November 27, 1992, argued against this classification, stating it was a private entity recognized under the Securities (Contracts) Regulation Act, 1956 (SCRA) by the Securities and Exchange Board of India (SEBI), a delegate of the Central Government. However, the court found that this recognition, akin to an establishment by the government, satisfies the criteria under the RTI Act.
The judges relied on the precedent set by the Supreme Court in the Thalappalam case, which outlined the categories under which an entity is deemed a public authority. The court emphasized that the NSEI was controlled by governmental regulations, highlighting a previous judgment in the Delhi Stock Exchange case, affirmed by the Supreme Court, which underscored the deep and pervasive governmental control over stock exchanges.
The court also analyzed the terms "established" and "constituted," stating that these encompass organizations that, while initially set up privately, acquire a public authority status through subsequent governmental recognition or control. They found that SEBI's recognition under Section 4(3) of the SCRA was crucial for NSEI's operation, thereby constituting it as a public authority.
This decision is poised to enhance transparency in NSEI's operations, allowing public access to information under the RTI Act, and reinforcing the accountability of stock exchanges, which play a vital role in the economic framework.
Bottom Line:
Stock Exchanges recognized under Section 4(3) of the Securities (Contracts) Regulation Act, 1956 (SCRA) are "public authorities" under Section 2(h) of the Right to Information Act, 2005. Recognition by SEBI, acting as a delegate of the Central Government, constitutes "establishment or constitution" for the purpose of being classified as a public authority.
Statutory provision(s): Section 2(h) of the Right to Information Act, 2005; Section 4(3) of the Securities (Contracts) Regulation Act, 1956
